Bank of Canada Senior Deputy Governor Tiff Macklem’s chances of replacing Mark Carney as the central bank’s top official are between 50 percent and 60 percent, according to analysts at JPMorgan Chase & Co.
The second-most likely candidate is Stephen Poloz, chief executive at Export Development Canada, according to a report today by Kevin Hebner and Sandy Batten in New York. Macklem’s promotion isn’t certain because the last two selections skipped over the top deputy while Finance Minister Jim Flaherty has suggested he wants someone with deep financial market experience, according to the report.
“The market may be underestimating the possibility of a surprise,” wrote Hebner, a foreign-exchange strategist and Batten, a senior economist. “Choosing Macklem would represent an endorsement of existing BoC policy, which has been to maintain a tightening bias in the face of deteriorating economic conditions, even as central bank policy makers in other G-7 countries add stimulus. However, we think a surprise announcement would likely be interpreted dovishly” and may weaken the Canadian dollar, they said.
Canada’s benchmark interest rate has been 1 percent for more than two years. Policy makers in the world’s 11th largest economy are grappling with a strong currency and sluggish global demand that’s hampering exports, record consumer-debt loads impinging spending and inflation averaging below the Bank of Canada’s 2 percent target.
Governor Carney is leaving the Ottawa-based central bank on June 1 to take over the Bank of England a month later.
“Front-runner Macklem is well-liked and supported within the Bank, and we think he certainly has the qualifications to be Governor,” Hebner and Batten wrote in the report.
Other candidates to replace Carney include deputy governors Timothy Lane and Agathe Cote along with former deputy governor Jean Boivin who now works at the finance department, the report said. The job could also go to Bank of Montreal (BMO) Vice Chairman Kevin Lynch or Julie Dickson, the country’s top banking regulator, Hebner and Batten wrote.
To contact the reporter on this story: Greg Quinn in Ottawa at firstname.lastname@example.org